How Dallas builds affordable housing downtown

Published: 21 January 2014 06:36 PM

Updated: 21 January 2014 06:47 PM

The city of Dallas recently received a letter from the Department of Housing and Urban Development criticizing its practices on the development of affordable housing in downtown Dallas.

To provide context and enlightenment for the current discussion, we need to take a look at existing affordable-housing developments, as well as those coming to downtown.

First, we should consider affordable housing as part of the overall effort to build downtown housing. Building housing downtown is expensive. Affordable housing cannot be built downtown without city support. In fact, very little housing of any kind can be built downtown without support from City Hall.

Our leaders decided subsidizing housing was better for downtown than razing obsolete office buildings. Out of that philosophy came a number of older buildings (Republic Tower, the Mercantile, Lone Star Gas Lofts, CityWalk, Dallas Power & Light, etc.) that now provide or will soon provide housing.

Second, downtown Dallas isn’t hostile to affordable housing; it’s welcoming. Downtown Dallas has combined aggressive revitalization with a vision for even bigger things. At the same time, downtown residents have supported affordable-housing developments more willingly than have most places in the city.

Even after receiving tax credit awards, borrowing as much as possible and securing funding from the city, each project still needed to find additional sources of funding to make the deals work.

Lone Star Gas Lofts, completed in 2012, leases 107 affordable apartments. This summer, the project is set to add 123 more apartments (63 of them in the affordable category), 10,000 square feet of retail and a parking structure with 253 spaces. To fund the development, low-income tax credits, loans and city funding were supplemented by historic tax credits and a grant from the North Central Texas Council of Governments.

Finally, Flora Lofts received a low income tax credits allocation last year for construction beginning this spring. The development includes 39 affordable units, seven market-rate units, 8,000 square feet of retail and 215 parking spaces. Flora Lofts will take advantage of federal energy tax credits. Recently, a city committee recommended that Dallas invest $2 million in tax increment funds in the development in return for the leasing of 50 parking spaces in the Arts District. The briefing documents also show more than $5 million of private equity.

Certainly, these developments could have been completed more quickly had the city of Dallas put even more money into them. But the city will have invested a total of $17.85 million in these three developments (assuming approval of the additional $2 million investment for Flora Lofts). In return, the city receives an additional 361 affordable apartments, 73 market-rate residences, more than 50,000 square feet of retail space and more than 500 spaces of structured parking downtown.

That works out to $43,643 for each affordable housing unit if you average all three developments. That’s compared with the $360,000 in city money requested per affordable unit for the development at 1600 Pacific that is the basis of HUD’s letter to the city.

While the city could have invested differently, and I have long argued that as a community we need to raise and devote more local funds to affordable housing development (especially for homeless neighbors) in all parts of the city, it certainly looks like the city got a really good deal on CityWalk, Lone Star Gas Lofts and Flora Lofts.